Note: Running most Fridays in FromGregsHead.com, is a continuing series of tips brought to you by Greg Price. These run Saturday mornings during the BusinessMaker’s Radio Show on Supertalk 97.5. Audio files can be found on the Entrepreneur’s Playbook page of the PKF Texas website.
Unless you have been living under a rock these past few years, you probably have heard someone talk about Sarbanes Oxley (SOX) and its impact on internal control reporting at their business. Long before the creation of SOX legislation, the concept of developing and adhering to, strong internal controls was well known. But, many organizations didn’t give it as high as a priority as they should have.
History has shown, that focusing on internal controls is not just for public companies that are required to comply with federal and state regulations. In fact, there are benefits for privately held and not for profit organizations as well. Internal controls include, but are not limited to:
- Segregation of duties;
- Approval limits;
- Authorizations; and
- Programmed Controls
But from our perspective the most important control is the tone at the top towards compliance as set by the CEO. Without proper support from the CEO, internal controls will take a back seat to operational needs. Make sure your executive management team supports the development and implementation of effective internal controls. If you don’t, you be wasting more than time and money. You will wasting a chance to impress your customers, investors and employees with solid business practices that improve your profitability.